City Hall Hustle: Make Yourself at Home

Neighborhoods split over burgeoning vacation rentals

"Vacation – All I ever wanted

Vacation – Had to get away

Vacation – Meant to be spent alone"

– The Go-Go's, "Vacation"

The neighbors are restless.

That much was evident at a jam-packed, city-sponsored stakeholder meeting last week, considering short-term residential rentals.

No longer the domain of iffy Craigslist ads and friend-of-a-friend word of mouth, short-term residential rentals, aka vacation rentals, are suddenly big business, especially in Austin. The dominant player in the field, HomeAway.com – which lets users locate and reserve vacation homes across the country and the globe – is based here. And with South by Southwest, Austin City Limits, and dozens of other events regularly drawing in visitors, Austin's an increasingly popular city for vacation rentals – which offer customers literally all the amenities of home, at prices often lower than those for hotels, especially for longer stays.

But as vacation rentals have grown in popularity, questions surrounding their compatibility with neighborhoods – driven by some horror stories from next door – has spurred the city to take a closer look. The neighborhood-association-friendly Planning Commission enlisted the Planning and Devel­opment Review Department, which hosted last week's packed meeting (Jan. 27 at One Texas Center) to discuss the matter and hear public comment.

"Is there a point at which a house is rented out frequently enough and for short enough duration, that the activity resembles more of a commercial operation than a residence?" asks Robert Heil, a senior planner with P&DR tasked with looking into the issue. "That's one of the questions." It's easy to get different answers, depending on whom you ask; vacation rental owners depict the matter as a question of property rights, and detractors question whether an avowedly commercial operation makes sense on a single-family-zoned plot.

The closest comparisons are bed & breakfasts, but B&Bs face far more onerous restrictions than vacation rentals. While eligible to be located in a neighborhood, a B&B can't operate within 1,000 feet of another, and owners can operate only one, as they're required to live on-site. None of the above applies to vacation rentals; in fact, many of the speakers supporting rentals (roughly two-thirds of the meeting's speakers) owned multiple properties. Really, the only specific regulation on vacation rentals (aside from city requirements implemented on all rentals, like code compliance, smoke detectors, dead bolts, etc.) is that for stays under 30 days, they pay the city's hotel occupancy tax, which the corporate-sanctioned properties assuredly do.

Striving to get all vacation rentals up to an industry standard was one theme that emerged from the meeting. "If there are best practices that short-term rental properties are using, what can we do to encourage all property owners who rent for short periods of time to adopt those same best practices?" Heil asks. The speaker comments were mostly anecdotal, with owners rattling off famous renters like Elijah Wood and the Coen brothers, and opponents recounting war stories of next-door party-till-you-puke bacchanals. But several solid proposals were floated: creating a registry of rental homes; additional insurance requirements; noise and disturbance clauses that include forfeiture of deposits; and limits on the number of disturbance calls a property can generate before it's blocked from further rental. Heil also notes any changes will likely include "education and outreach by the city to make sure everyone knows what their responsibilities are."

Nevertheless, a few dead-enders in attendance weren't happy with anything less than complete prohibition. When neighborhood liaison Carol Gibbs urged speakers to keep their remarks constructive instead of calling for an outright ban that's unlikely to happen, one outraged person screamed from the back, "Why would you say that?!" Other speakers dwelled on the tax issues, claiming that, with hotel occupancy less than 100%, the city loses money by allowing vacation rentals, some of which may not be on the up-and-up – ignoring the fact that if all rentals were banned, no taxes would go to the city, instead of what's likely a small loss currently. The Office of the City Auditor is expected to weigh in with a report to the Audit and Finance Committee on Feb. 22, looking at the compliance rate for the hotel occupancy tax across the board – hotels, motels, B&Bs, and vacation rentals. Ultimately, P&DR will take its findings back to the Planning Commission, which will then make a recommendation to the City Council.

In many ways, the vacation-rental genie is out of the bottle – HomeAway.com is already getting ink for its early release Super Bowl ad – with publications such as Time, The Wall Street Journal, The New York Times, and more lauding sites like HomeAway, sister site Vacation Rentals by Owner, and vacation rentals in general. But ironically, for services that sell themselves on the allure of living like locals, the locals are decidedly ambivalent.

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KEYWORDS FOR THIS STORY

vacation rentals, HomeAway.com, city, Planning and Development Review Department

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